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NZ's biggest company looking for a new boss

Tuesday 1st March 2011

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New Zealand's largest company, Fonterra Dairy Co-operative, is looking for a new chief executive after Andrew Ferrier announced he is to step down later this year.

The board has been assessing internal candidates for nearly two years, and an international search began at the end of last year.

Ferrier had indicated some time ago that he wanted to move on by the end of 2011, but his first priority was to do what was right for the business, co-operative chairman Sir Henry van der Heyden said.

Ferrier took the job two years after Fonterra was created in 2001 by the merger of the Dairy Board, Taranaki-based Kiwi Co-operative Dairies and Hamilton-based New Zealand Dairy Group.

The decision had been a surprise, although chief executives in top jobs did not stay forever, said Federated Farmers dairy section chairman Lachlan McKenzie.

"No question at all, it's no mean feat to try and bring together three proud organisations together. The country is littered with mergers and acquisitions that haven't gone to plan."

The tainted milk scandal in China involving Fonterra-controlled Sanlu Group, which resulted in the deaths of babies, was the low point during Ferrier's tenure.

On the other hand, Ferrier could take credit for the performance of Fonterra's profitability and the returns to farmers, Mr McKenzie told NZPA.

"We've had a global recessions and things and we've still had a significant profit, and we're still having payouts, the money's being paid out to farmers.

"I don't hear any significant grumblings among farmers against the CEO," McKenzie said.

Not much thought had been given to Ferrier's successor, but farmers wanted someone who understood what the co-operative meant to its owners.

"We want this to be a long-lived company and to be around for the next generations to come and so we will not be wanting a CEO that puts that at risk."

Fonterra's capital structure had evolved, with more flexibility now in the way farmers can own shares in relation to their milk production, and more change was likely.

Fonterra and the Government are also consulting on a proposal to offer the public a stake in the dairy giant, creating non-voting shares.

Brian Gaynor of Milford Asset Management said it had been very difficult to find out much about how the company operated under Ferrier.

"Unlike most chief executives of the largest companies in other countries, he was very low profile, he was very understated and he was not well-known in the investment and finance community as a result of this," he told NZPA.

"It appears from the outside that the company is now very much a united company rather than one which was made up from factions from the two major co-operatives that merged to form it. That's the one thing that he's probably done."

The next chief executive would probably be seen much more in the business community, he said.

Ferrier will continue living in New Zealand, but wanted the flexibility to spend more time with family, including in his homeland Canada, and to pursue other business interests.

He started his career in the sugar industry, including with the Tate & Lyle in Canada where he took charge of the British company's North American operations.

In 2000, he became CEO of Canadian building products supplier GSW, and was then approached to head Fonterra.



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